Obamacare Premiums Set to Rise, Even for Savvy Shoppers

In the last few years, even though premiums in the Affordable Care Act’s health insurance marketplaces were rising, most customers could avoid a big price rise by shopping for a cheaper plan.

Next year, according to a preliminary analysis, that is going to be a lot harder.

Even someone who shopped wisely this year and is willing to switch plans to get the best deal next year is looking at an average premium increase of 11 percent, according to an analysis of rate filings in 18 states and the District of Columbia provided by the McKinsey Center for U.S. Health System Reform.

That’s more than double the increase McKinsey measured last year for the same plans in the same group of states.

To get the best deal, more than half of last year’s bargain hunters will need to switch. The plans that were least expensive this year in the popular “silver” category are no longer the price leaders in most markets, according to the analysis. People who want to stay in their current plan — either because they like the coverage or want to keep a certain group of doctors and hospitals — could face much larger increases.

The national picture could be even worse. This analysis looks only at states that have publicly released all insurance filings for next year, and some of those states have the most stable markets. In many of the remaining 32 states with the health exchange plans, insurers have been requesting large price increases, and lower-cost insurers have left.

Most current customers will be insulated from the full increases. To help people afford insurance, the law offers sliding-scale subsidies to people earning less than 400 percent of the federal poverty level, which at $11,880 for a single person means just under $48,000 to qualify. The analysis suggests that most people with a subsidy will see smaller price increases if they switch to the lowest-cost plan. But people earning higher incomes, who pay the full cost of their insurance, will face bigger price increases than before. So will the federal government, which will now pay more in subsidies for everyone else.

The Department of Health and Human Services has been highlighting the role of subsidies in buffering the effects of price changes. In a recent white paper, it estimated that, even if all premiums went up by 25 percent, a large majority of customers could still find plans that would cost them less than $75 a month. That report assumed that the income mix of customers in the marketplace would not change, and that all premiums would increase in perfect concert.

“We remain confident that the majority of marketplace consumers will be able to select a plan for less than $75 per month when open enrollment begins November 1,” said Marjorie Connolly, a department spokeswoman, in an email. “Last year, the average monthly premium for people with marketplace coverage getting tax credits increased just $4.”

Of course, the agency is also hoping that more people sign up for the plans this year, including some who pay the full cost of their premiums.

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Signing up for health insurance through the Affordable Care Act in Miami in 2014.Credit...Joe Raedle/Getty Images

The new analysis looks at the least expensive plan in the most popular category, silver. When customers switch plans — this year 43 percent did so — many gravitate toward these plans. Our national average is weighted by the number of people eligible for the marketplaces in the parts of the country we analyzed. The rates in 14 states are still being considered by local regulators.

A broader look at premiums is likely to find even higher average increases. Charles Gaba, who runs the website ACASignups.net, has been scouring public sources of information about next year’s rates. He has calculated an average national rate increase of around 24 percent. Mr. Gaba’s numbers have some limitations compared with the McKinsey data — he is looking at averages across a wide range of individual insurance products, not just those in the Affordable Care Act markets.

And he has examined information only about plans that are returning from 2016, not new plans or carriers. But his estimate, too, is around double what he calculated last year around this time: 12 percent.

The larger premium increases for 2017 are not a surprise. Several predictable factors help explain them. Two government programs that helped insulate the insurance companies from big losses expire at the end of this year. And many insurers with low premiums in the past have found that their prices weren’t high enough to cover their costs. Unexpected losses in this market have led some insurance companies to go out of business, and others to leave the markets voluntarily.

An optimistic view of this year’s price increases is that they represent a one-time market correction, as insurers adjust to the real costs of caring for these customers and to the changes in federal policy. The more pessimistic view is that declining competition and enrollment could lead to rising premiums in future years, too.

Cynthia Cox, an associate director at the Kaiser Family Foundation, which has analyzed similar rate filings for big cities, said that on the whole “the factors that are driving premiums to increase in 2017 are one-time factors.” Price trends for future years, she said, will depend on how many people sign up.